Should You Offer HVAC Financing Options to Customers?

June 10, 2022 | Read: 9 minutes

HVAC Financing Options

Providing customers with financing options means modifying the way you sell your services.

However, it will enable more flexibility in your sales process, and can help your team overcome common pricing objections and win more business.

Depending on if you use software or not, this can take some time to implement.

But as buying habits evolve, as well as seeing an upward trend in HVAC services, many businesses are seeing an influx of customers upgrading old equipment, or installing completely new systems.

Investments like this can come with a hefty bill, though, which has left many companies asking how they can still provide for their customers.

Financing—is we’ll see—is part of the answer.

It’s easier said than done to implement, which is why we’re here to help you along the way! We’ll break down everything you need to know about how to offer your HVAC services with financing.

Let’s dive in!

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How does HVAC financing work?

Financing can be a complex topic. There’s a lot to account for, like interest rates and tracking monthly payments. Therefore, before you start to explore how to offer financing to customers, it is important to know what is required to implement this payment option.

Financing enables you to break down the total cost of your services and equipment. You allow customers to pay in small amounts overtime instead of being paid in one invoice.

Typically these payments come in monthly installments, and in most cases will also include interest. 

Financing breaks down the total cost of expensive goods and services. It also enables customers to make smaller, more manageable loan payments according to a set schedule. Rather than paying the full price at the time of purchase, customers make regular payments on a monthly, bi-weekly or weekly basis.

In most cases, customers are charged interest as part of their loan payments. Interest rates vary depending on the terms of the loan. In some cases, merchants will offer zero-interest financing as an incentive to potential customers.

If this sounds like a strategy that will work well for your HVAC business, then read on for all the advantages that come with it!

The benefits of offering financing to customers

HVAC financing options can be appealing to both businesses and customers alike. It’s a great way to give buyers more flexibility in their purchasing process, and helps drive sales and improve business cash flow

Let’s break down each of the benefits: 

Boost sales with HVAC financing

It can sometimes be difficult for customers to understand why certain services are priced the way that they are. After all, most big ticket jobs are long term–like installing central air conditioning in a home. 

Therefore, when buyers receive an estimate with the breakdown for parts and labor, they may be shocked because, for many, it’s the first time they’ve needed this type of service. 

Financing won’t reduce the value of the work in any way, but it will make the price seem far more manageable to a customer. After all, the average central air install costs $5,682. For many, this is a hefty upfront payment to make and may lead to hesitations about accepting the proposal. 

However, if you present HVAC financing options to the customer, the pricing may seem more reasonable. 

For example, when presenting the estimate, explain that they can make monthly payments over a 24 month period. This means, they’re only paying about $240 per month. In some cases, that may be the cost of their monthly electric bill from using inefficient fans to cool their home during the hotter months. 

It’s a simple adjustment in your sales process, but it can have massive results. One study found that by offering financing options in this way, you can actually increase sales by 32%!

Use HVAC financing to upsell customers

When it comes to how to offer financing to customers, don’t just limit yourself to providing this option to new prospects. In fact, it’s a great opportunity to win repeat business with your existing customer base. 

For example, maybe you have previously worked with a client who really wanted automatic temperature control for their home–but the price was just too expensive. Instead, they opted for a standard central air install. 

Consider reaching out to them about financing this HVAC project. Create a proposal that shows them how, with a slight increase in their monthly payments, they can get the upgrade they want. 

This can be impactful not only for upsells and driving revenue, but also for creating customer trust. After all, you went out of your way to provide them with an alternative solution–and at the very least they’ll be thankful for your efforts to help them get what they want. 

Which leads us to…

Offering finance options is a way to build customer loyalty

Customers love convenience. We don’t want things to be difficult during the buying process, especially when we’re investing large amounts of money. By providing HVAC financing, you’re giving customers more options, and as a result making their decision to purchase easier. 

If they need the service done but can’t afford it, they won’t have to take out a loan or turn to friends and family for money. Instead, they can work with you directly–making the process less stressful for them. 

As simple as it sounds, these kinds of positive experiences keep customers coming back to your business. You’re ultimately building brand loyalty, which leads to not only repeat business, but also referrals

This can be extremely advantageous, and is one of the best ways to obtain business. 

If you want even more insights on how to win jobs with financing, be sure to check out this conversation between finance expert Aidan McMahon and Commusoft’s CEO, Jason Morjaria!

The disadvantages of HVAC financing options

Offering financing options has many benefits, but as with anything in life, it also has its less positive aspects. It’s essential to weigh both sides of this pricing strategy, and consider what will work best for your business. 

Financing HVAC services means waiting to get paid

It’s a tough question to answer, but you’ll need to ask yourself if your business can afford to offer financing to customers. 

Going back to our earlier example, for instance, consider if you need that $5,682 upfront after you complete the central air install. You will still need to pay your staff for their work and your vendors for the parts well before you receive the complete amount for the job.

If you’re unsure about this being a viable option, we recommend doing a deep dive into your job reporting and analyzing your finances. While financing can help you win more business long term, it also means your cash flow increase will happen more slowly. This may not be realistic for some businesses, and that’s perfectly okay! 

Offering HVAC financing options is by no means a requirement for a business to be successful. In some cases, it may not be beneficial at all. What is most important is finding out what will work best for you and your company. 

When you offer your clients financing, you run the risk they may not pay

Unfortunately, many businesses experience non-paying customers now and again. It’s a frustrating situation, but one that is essential to be prepared for. 

This is especially true for financing, because customers will have to keep up with payments over a long period of time. As with any job, there is always the risk they may become delayed in paying you on time, or just stop paying altogether.

The good news is, there are many preventative measures you can put in place to reduce the chances of this happening! If you want an in-depth list of options, be sure to check out this article on what to do when customers won’t pay. 

If you’ve experienced this problem in the past, and are especially worried about it happening again if you offer HVAC financing, we recommend implementing payment information recording. 

Many companies do this–both in field service and outside of the industry. For example, think about your internet bill. Most people sign up for a year contract with a monthly rate they have to pay. 

To incentivize customers to pay on time, some internet companies offer special discounts for clients who set up automatic payments. This means at the beginning of each month, the monthly rate will automatically be taken from their bank account. 

This is an effective strategy because it reduces late payments, and ultimately eliminates non-paying customers. You can easily implement this strategy for your HVAC business as well. 

Learn about HVAC software that will help organize your financing efforts!

Is HVAC Financing Right for your Business?

When it comes to how to offer your clients financing, there really is no one size fits all. The strategy you implement will be unique to your business and your customer base. 

HVAC financing is a great way to provide flexible buying options to prospects, and generate more sales as a result. You can also utilize finance options for upsells to new and existing customers, and help gain their trust and loyalty by doing so. 

Of course, you’ll also need to consider if it’s the right choice for your HVAC business to offer financing. It’s important to analyze your reports and understand if it makes sense for your business long term to utilize this strategy. 

Also, be prepared for worst case scenarios and how to handle non-paying customers. Before you implement financing, design a plan that will help you navigate these situations, and consider using payment information recording as a solution. 

For more information, explore our Ultimate Strategy Guide and get to grips with selling. From building your team, managing sales, and more information on financing, there’s plenty to explore!

selling for the trades; explore the ultimate sales strategy guide

When I'm not researching industry trends and writing about business strategies, I spend time with friends and family, travelling, and searching for the world's best chocolate chip cookie.

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